The question of whether it’s okay if a debt collector can include language in its letter that the creditor may take legal action at some point in the future reared its head in the Southern District of New York (S.D.N.Y.)—and the result was favorable to the debt collector. The court dismissed the case.

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What Happened?

In Rosenberg v. Client Servs., Inc., (S.D.N.Y. May 26, 2020), the debt collector defendant sent a letter to the plaintiff that contained the following language, “Capital One will send your account to an attorney…for possible legal actions. Please note, no decision has been made to take legal action against you at this time. I want to help you avoid any possible legal action.” The letter then included the debt collector’s telephone number. The following paragraph in the letter contained the validation rights language required by section 1692g of the Fair Debt Collection Practices Act (FDCPA).

The plaintiff sued, presenting three different arguments:

1. That the letter improperly threatened litigation against the consumer;
2. That the letter falsely represented the status of the debt, as a legal action notice was premature at this stage of the debt’s lifecycle; and
3. That the legal action notice overshadowed the consumer’s validation rights.

The Court Dismissed the Entire Case

The court was not convinced by any of the plaintiff’s arguments. 

First, the court found that the threat of litigation claim fails. While the palintiff attempts to read only snippets of the letter to make the proverbial glove fit, the court notes that the letter as a whole—heck, even just the legal action notice read as a whole—tells a different story. Nothing in the legal action notice states that legal action is imminent. Instead, the notice clearly states repeatedly that legal action by the creditor is congingent upon several things (no resolution with the debt collector, an attorney’s review of the account, etc.). 

The court noted that even if the language was deemed to be an imminent threat of litigation—which it is not—the claims fails as plaintiff failed to allege that such a threat would be false.

Second, with similar reasoning as the question of imminency above, the court likewise found that the legal action notice was not premature. Again, the disclosure provided the applicable contingencies, and a collection letter can include potential remedies.

Third, the court rejected the overshadowing argument. The court found that the legal action notice was in the same size and typeface as the validation rights paragraph, so the format of the letter wasn’t overshadowing. The court found no overshadowing issues with the inclusion of a telephone number, as it merely encourages communication with the debt collector. And, finally, the court found that the legal action notice, since it does not imply imminence, it did not somehow overshadow a consumer’s right to proceed with disputing the debt in the validation window. 

The court dismissed the complaint and closed the case.

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Want to track how the New York courts are ruling on the overshadowing claims?
The iA Case Law Tracker helps you do that in less time than it takes to pour your morning cup of coffee.

Editor’s note: This article is provided through a partnership between insideARM and Squire Patton Boggs LLP, which provides a steady stream of timely, insightful and entertaining takes on TCPAWorld.com of the ever-evolving, never-a-dull-moment Telephone Consumer Protection Act. Squire Patton Boggs LLP—and all insideARM articles—are protected by copyright. All rights are reserved.

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As TCPAWorld is well aware, the 9th Circuit’s Marks decision broadly defines what constitutes an ATDS under the TCPA. And, of course, this decision has led plaintiffs to seek out various ways to bring their claims in California (and elsewhere within the Circuit) in order to take advantage of that broad ruling. However, the Court’s decision in Laguardia v. Designer Brands, Case No.: 19cv1568 JM(BLM), 2020 U.S. Dist. LEXIS 88142 (S.D. Cal. May 7, 2020), demonstrates that those deliberate tactics are not beyond reproach.

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To the meat of the matter – in Laguardia, four plaintiffs sought to bring a TCPA class action in the Southern District of California. All plaintiffs sought to represent a No Consent and Revocation class stemming from alleged unsolicited telemarketing text messages. Two plaintiffs sought to represent a DNC class. All plaintiffs resided in California, but only one plaintiff (Laguardia) resided within the Southern District of California’s jurisdiction. The defendants, Designer Brands Inc. and DSW Shoe Warehouse, are each headquartered in Ohio – i.e., within the 6th Circuit’s jurisdiction.

Defendants filed a motion to transfer the entire class action to the Southern District of Ohio. The motion was premised on the fact that three of the plaintiffs have no connection to the Southern District of California, thus the Court has no specific jurisdiction over their claims against defendants. Defendants also argued that Laguardia’s claim, though having some connection to the district, was not sufficiently tied to the district to permit his putative class claims to proceed in California. In response, plaintiffs did not hide the fact that they sought to have their claims litigated in a favorable jurisdiction.

The Court agreed with defendants.

As to three of the plaintiffs, the Court found that none of them resided within the Southern District of California, and that each had failed to show a connection between the forum (the Southern District of California) and their claims (alleged unsolicited text messages) other than blatantly boot-strapping themselves to the similar claims of the only resident plaintiff (Plaintiff Laguardia). However, as the Court recognized, each plaintiff – not just a single plaintiff – “need[s] to connect their claims to this District” in order to trigger proper venue. Finding that the non-district-resident plaintiffs “have not tied their claims to any forum-related act or transaction on the part of Defendants,” the Court severed their claims from Plaintiff Laguardia’s and transferred them to the Southern District of Ohio.

But the defendants also sought to transfer Plaintiff Laguardia’s claim. As to that issue, the Court found that, although a plaintiff’s choice of forum is entitled to some deference, this is not the case when the plaintiff seeks to represent a putative class. However, recognizing that the defendants are Ohio residents, and that any marketing decisions related to the alleged text campaign likely took place in Ohio for that reason, the Court found that the balance of factors weighed in favor of transferring Plaintiff Laguardia’s claims to Ohio as well.

In the end, plaintiffs were prevented from taking advantage of court rules and procedures to force their claims to be litigated in a Marks friendly venue. It is even likely that their blatant effort to take maximal advantage of 9th Circuit precedent even doomed their resident-plaintiff’s (Laguardia) class claims from being litigated in the Southern District of California. Regardless, Laguardia makes clear that carpet-bagging claims is not permitted and, by doing so, a litigator may even jeopardize the status of the resident-plaintiff’s claims in the chosen venue and forum.

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Want to track FDCPA, FCRA, and TCPA trends?
The iA Case Law Tracker helps you do that in less time than it takes to pour your morning cup of coffee.

On May 21, the Consumer Financial Protection Bureau (CFPB) released a special COVID-19 edition of its Complaint Bulletin. The CFPB observed trends in its complaint database, particularly to determine what impact the pandemic is having on consumer complaints. The most interesting observation for the industry (even though it is not called out by the CFPB): debt collection continues to drop down from its prior spot as the most complained-about product.

Debt Collection Complaints: The Trend

While the CFPB calls out credit reporting and debt collection as the two most complained-about consumer financial products, the rest of the report shows that debt collection complaints falling further and further behind credit reporting in this category. 

Specifically, in a chart that compares the average weekly complaints pre- and post-COVID by product, debt collection is one of three products—out of thirteen total—that had a negative percentage change.

One other area that evidences that debt collection compalints are no longer top-dog: the chart where the CFPB tracked coronavirus keywords in complaint by products (see section below). In addition to tracking keywords, the chart also includes a product-by-product comparison of year-to-date percentage of total complaints for 2019 and 2020 (as of April 30 of both years). Debt collection complaints accounted for 22% of total complaints YTD in 2019, whereas in 2020 that percentage dropped to 18%.

Later in the Bulletin, the CFPB mentions that, “[c]onsumers described continued attempts by companies to collect a debt. Consumers who received collection attempts by companies expressed dismay that companies are continuing collection activities during a national emergency.”

Credit Reporting Complaints Continue Upward Trend

While debt collection complaint oercentages are seeing a small downward trend, credit reporting complaints are continuing to see fairly steady increase in volume, especialy post-COVID where the newly-enacted CARES Act has some implications. The CFPB states, “[s]ome consumers who are pursuing alternative payment options expressed concern about the potential negative credit reporting implications. Some consumers are concerned about negative reporting and, consequently, a reduced ability to obtain financing.”

COVID-19 Keywords

One of the highlights of this edition of the Bulletin is that it tracked the number of complaints received for each product that referenced keywords related to the pandemic. Debt collection is fourth on the list, with only 12% of debt collection complaints contained a triggering keyword. The frontrunner products with COVID-19 keywords are mortgage (22%), credit card (19%), and credit reporting (14%).

Consumers Unable to Contact Companies

One other note to highlight about this report is that consumers are complaining that they are unable to reach customer service representatives to discuss issues. The report notes, “[s]ome consumers are reporting hold times of several hours. For those who are pursuing payment options, some described no method other than phone to access potential options.”

This is an issue described for mortgage, credit card, vehicle loan/lease, student loan, and personal loan products.

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insideARM Perspective

Let’s focus for a moment on that last point and discuss the need for self-service portals for consumers. While debt collection is not one of the products listed with the issue of access to customer service, it never hurts to see how companies can improve their functionality.

A customer self-service portal would help alleviate the issue of long wait times. Many debt collectors already have online payment portals, some even utilize artificial intelligence to negotiate repayment plans with consumers—all without the consumer ever having to speak to a person. The debt collection industry has been hit just like every other industry during this pandemic, with some debt collectors having to lay off employees or otherwise downsize their businesses. This type of technology helps alleviate the question of how to continue servicing customers when the number of phone representatives decreases.

Recent data released by PayNearMe shows some trends in where consumers were sending payments after the government began depositing CARES Act stimulus checks in consumer’s bank accounts. Using its payment platform, PayNearMe tracked what categories of payments consumers have been making over the past couple of months. 

According to the data, the biggest jump in payments after stimulus checks were depositied went to rent and loans, with a slightly smaller—but still significant—jump in utility payments.

Since the stimulus check deposits made in mid-April were electronic direct deposits, the data also shows what we would expect: using forms of payment compatible with electronic transactions also increased. The chart below, for example, illustartes type of payments made on auto loans through the PayNearMe network. The chart shows a significant increase in card and ACH payments, and a much smaller increase in cash payments.

For those interested in continuing to track this type of information, PayNearMe maintains a COVID-19 Payment Trends page.

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PHOENIX, Ariz. — Payment technology and processing leader Base has acquired the merchant accounts of LucentPay, a full-service payment processor and merchant services provider. The move underscores Base’s focus on leveraging both organic expansion and acquisitions to drive rapid growth. 

“Our aggressive growth strategy is fueled by a variety of carefully coordinated tactics, one of which is acquiring companies where there is advantageous synergy between our organizations,” said David Schoenecker, Base COO. “We were already providing processing services for LucentPay’s merchants, so the acquisition met all of our success criteria. And, merchants can rest assured that we’ll continue to provide the attentive service that they have come to expect.” 

LucentPay specializes in processing payments for the collections industry. Its innovative No-Cost-to-Biller™ (NCTB) solution enables collection agencies to process credit cards, debit cards, HSA/Flex cards, and ACH transactions at no charge. Developed in collaboration with compliance experts, the solution helps agencies avoid FDCPA liability when assessing service or convenience fees. 

The company’s unique offerings, record of success, and highly regarded support were cited as major factors in the acquisition. “LucentPay has done an exceptional job of addressing the specific needs of its merchants,” said Schoenecker. “We’re pleased to have secured these accounts and feel that this acquisition sends a clear signal to the industry that Base has far-reaching plans for furthering our position as a leader in payment services and technology.”        

NCTB is the first model of its kind to be vetted for all pertinent compliance pillars, including the FDCPA, CFPB, and state law, to ensure compliance. In addition, the model is backed by a legal opinion letter and favorable case law to mitigate compliance concerns.

“LucentPay’s NCTB model has the largest number of integrated vendors (software, web portals, text, and IVR),” added Schoenecker. “As a result, it can be deployed with minimal disruption to an agency’s current operational environment. That is a significant advantage for agencies.” 

About Base
Founded in 2008 and headquartered in Phoenix, Ariz., Base is a leading provider of advanced payment processing solutions. Stakeholders in many areas of the payments ecosystem rely on the company’s comprehensive suite of technology and service offerings to ensure that payments are processed securely, promptly, efficiently, and cost-effectively.

This video is part of the iA Think Differently series. Written by or recorded with members of the iA Innovation Council, the series showcases thought leadership in analytics, communications, payments, and compliance technology for the accounts receivable management industry.

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Today I’m talking with Ray Peloso, CEO of Katabat, a Wilmington, Delaware-based enterprise debt collection software platform. It can be a standalone solution, or it can complement existing systems and technologies by adding digital omnichannel capability. As a digital solutions provider, their phone has been ringing amidst the pandemic. When I asked about how he is thinking differently today, he said it’s all about speed. Those days of spending months or years developing or making your case? That strategy today will leave you behind.

[Editor’s note: If you are interested in topics like strategy, testing and scenario planning, you should not miss insideARM’s next conference, iA Strategy & Tech – a completely virtual event – July 21-23. It’s a masterclass in collections strategy.]

Transcript

The iA Innovation Council is a collaborative working group of product, tech, strategy, and operations thought leaders at the forefront of analytics, communications, payments, and compliance technology. Group members meet in person (and lately, virtually) several times each year to engage in substantive dialogue and whiteboard sessions with the creative thinkers behind the latest innovations for the industry, the regulators who audit and establish guardrails for new technology, and educators, entrepreneurs and innovators from outside the industry who inspire different thinking. 

2020 members include:

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In the not-too-distant past, FDCPA litigation was a no-loss game for plaintiff’s counsel. That is no longer the case, thanks to a pioneering debt collection agency—ERC—that has taken a stand against hyper-technical and baseless FDCPA claims, and gone after plaintiffs’ counsel who engage in such litigation schemes. Back in March, ERC won a sanctions motion against plaintiff and her counsel in Connecticut for a whopping $41,871.95. Yesterday, ERC won a motion for attorneys fees and costs, winning back nearly $37,000 in its attorney fees and costs.

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A call baiting claim we’ve all seen before

If your agency has seen FDCPA lawsuits and threats of suit in New York, you’re likely not a stranger to the facts established here. Plaintiff engaged a “credit specialist” named Tawanda Fraizer, who called ERC on plaintiff’s behalf. On the call, the credit specialist stated plaintiff wanted to dispute, and asked if the plaintiff needed to submit the dispute in writing. ERC accepted the oral dispute, but informed plaintiff she would also need to submit the dispute in writing.

Plaintiff then filed a lawsuit—which, according to the court, “[cited] statutes of dubious applicability”—with two FDCPA claims. First, that ERC didn’t “affirmatively notify” the credit bureaus of her dispute. Second, that requesting plaintiff to send her dispute in writing was a false representation since she had a right to dispute orally. 

Stonewalling during litigation

During the litigation process, plaintiff’s side stonewalled discovery. The credit specialist refused to comply with a subpoena, and plaintiff’s counsel refused to allow ERC to depose the plaintiff. After ERC moved to extend the discovery period to depose plaintiff, plaintiff’s counsel offered to voluntarily dismiss the case—which ERC rejected. 

The judge ordered plaintiff and her counsel to appear at a status conference to figure out what was going on. According to the court: 

At the evidentiary hearing, Plaintiff was surprised to learn that a federal case in her name was currently pending before this Court. Her testimony revealed that she had no involvement in bringing the case, other than signing an initial retainer whose true purpose she did not understand. She was not aware of any discovery requests, or of interrogatories which were answered in her name. Plaintiff also admitted that she had no reason to dispute her debt. She simply fell behind on payments and wanted her credit repaired. 

The credit specialist was deposed by ERC in another case, and the court found the nature of the scheme:

Frazier’s Eisner testimony, which this Court accepts in accordance with Fed. R. Evid. 804(b)(1), reveals her close working relationship with the Rephen Firm. Following a script, Frazier would call debt collectors and ask them leading questions to elicit violations of the FDCPA. She would dispute the account in every instance, irrespective of any justification to do so. Conversations containing purported violations were then funneled to the Rephen Firm.

The parties agreed to dismiss the case with prejudice if ERC was permitted to move for attorneys’ fees. And that is the basis of the instant order.

Court grants attorney fees to ERC

While the court noted that FDCPA sanctions are typically applied to plaintiff’s misbehavior, this case warrants “application of the statute consistent with reality” by sanctioning plaintiff’s counsel.

According to the court, plaintiff’s counsel—not plaintiff—brought this case. Plaintiff had no idea a lawsuit was being filed. The court states, “[plaintiff’s] lawyers brought it without her participation, and in spite of the fact that she was not subjected to any abusive debt collection practices by debt collectors that the FDCPA was designed to eradicate.”

The court then went to find that in a situation like this—where an attorney brings a case without the client’s knowledge or involvement—sanctions under the FDCPA may be brought against the attorneys involved.

Below are a few more quotes from the court’s decision which show that the Eastern District of New York is smartening up to these types of schemes:

[The Rephen Firm brought this case] with the purpose of extracting a monetary award from the Defendant, for a harm its client did not suffer.Such behavior is not merely “harassment.” It is, without making a “fortress out of the dictionary,” more than annoyance or unwelcome conduct. It is nothing less than an attempt to transform a consumer protection statute into an ATM machine.

(Internal citation omitted.)

The Rephen Firm’s strategy was to use burdensome litigation to induce a quick settlement. When Defendant refused to settle and instead pushed for discovery, the Rephen Firm offered to dismiss the case rather than produce its client for deposition. At no point did it show any interest—or, indeed, have any interest—in prosecuting this case to vindicate Plaintiff’s rights.

As if this wasn’t enough, the court also went to find that the claims in the complaint are “entirely without legal support.”

insideARM Perspective

Y’all, the tide is changing. Fighting back works.

Shelly Gensmer, VP of Legal and Compliance at ERC, states, “This has been a long-fought battle against plaintiff’s attorney and his firm. The team put in many long hours of research trying to piece this one together so we could effectively illustrate the behavior of this firm and bring it to the attention of the court. ERC is not at all surprised at the award given the facts of the case. Of course we are very pleased and hope this win is just one more to help tip the scales in the right direction for our industry.”

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Want to find out which other plaintiff’s counsel/firms have been called out by courts for questionable behabior? The iA Case Law Tracker can help you do that in less time than it takes to pour your morning cup of coffee.

In a memorandum released yesterday, Connecticut extended its no-action position regarding branch licensing for those who are temporarily working from home during the pendency of the COVID-19 pandemic. The extension now goes through June 30, 2020. 

Connecticut initially issued this relaxed policy on March 9, 2020. It was first extended on April 16, 2020 to run through May 31, 2020. The current revised memorandum is the second extension. 

MUNCIE, Ind. — Ontario Systems, a leading provider of enterprise software that automates complex workflows and accelerates revenue recovery for clients in the healthcare, government, and accounts receivable management (ARM) markets, announced the acquisition of SwervePay®, an innovative payment facilitator in the ARM and healthcare industries. The acquisition of SwervePay offers Ontario Systems customers a simplified consumer payment engagement platform that helps drive revenue, reduce operational costs, and improve compliance.

Electronic payment processing is becoming an increasingly critical function for Ontario Systems customers. SwervePay consolidates the complicated multivendor environment, simplifies the underwriting and onboarding process, and shortens the funding cycle. With the new platform, Ontario Systems can unify payment processing for the nearly $35 billion in payments managed by the company’s software each year.

“The market is ripe for innovation, and we have an ongoing focus on evolving into a SaaS platform to help our 1,200 clients accelerate revenue and decrease operating costs through frictionless payments, efficient processes, and increased business intelligence,” said Tim O’Brien, Ontario Systems CEO. “The acquisition of SwervePay is our first step toward aggressively transforming legacy on-premise software solutions into an end-to-end SaaS solution to automate revenue recovery processes and drive consumer payments. Looking ahead, we’re positioned to develop new products with greater speed, gain network insights, and further connect to the evolving ecosystem around us.”

SwervePay’s consumer-friendly electronic payment solution makes payments easy and requires no app download or portal sign-in. Key capabilities include text-to-pay, same-day settlement options for ACH and credit cards, and account balance automated messages.

“The most important part of the accounts receivable operation is completing the final step—capturing and processing the payment—as smoothly as possible,” said Jaeme Adams, Vice President, Payments at Ontario Systems and former SwervePay CEO. “Together, Ontario Systems and SwervePay will remove an unnecessary point of complexity in the receivables process by unifying the workflow, consumer communications, and revenue capturing tools into one streamlined platform.”

This announcement comes on the heels of Ontario Systems’ acquisition by New Mountain Capital and the launch of Artiva Magnify™, a flagship product, in 2019. For more information about Ontario Systems, its offerings, and the markets it serves, please visit www.ontariosystems.com.

About Ontario Systems

Established in 1980, Ontario Systems is a leading provider of enterprise software designed to automate complex workflows and accelerate revenue for clients in the healthcare industry as well as federal, state, and local governments and the accounts receivable management (ARM) market. Headquartered in Muncie, Ind., with additional offices in Vancouver, Wash., and Albuquerque, N.M., Ontario Systems offers a full portfolio of end-to-end accounts receivable management solutions including the Artiva® family of products, RevQ®, Ontario Omni®, and SwervePay®, a single-source payment engagement platform. Ontario Systems serves thousands of customers processing nearly $35 billion in patient, constituent, and consumer payments each year.

To learn more about Ontario Systems, visit www.ontariosystems.com or www.justicesystems.com.

Editor’s Note: This article originally appeared on the TrueAccord Blog and is republished here with permission.

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The Northern District of California has confirmed what the law makes clear: a debt collector may send the initial communication by email (except in New York).

In Greene v. TrueAccord, Case No. 19-cv-06651 (N.D. Cal. May 19, 2020), the Plaintiff claimed the initial email she received and opened violated the Fair Debt Collection Practices Act (FDCPA) and the Electronic Signatures in Global Commerce Act (E-SIGN) because she never consented to receive email from TrueAccord.

As the District Court made clear, consent is not a factor when an initial communication contains the validation notice in the body of the email. Only one week after final submissions on the motion to dismiss the Complaint, the District Court dismissed the case with prejudice also finding TrueAccord’s validation notice met the requirements of the law and TrueAccord’s emails sent during the 30-day validation period did not overshadow the initial demand.

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Sending the initial communication and validation notice by email

A debt collector must provide a consumer with a notice about how to dispute an account.  The law states the notice must be given either in the initial communication or in writing within 5 days of that first communication.  The FDCPA does not state what methods a collector can use to provide the validation notice in the initial communication—it only indicates that a “communication” is conveying information about a debt through any medium.  Many debt collectors have hesitated to use email and other modern forms of communications that consumers prefer because these modes are not addressed in the FDCPA.  

In this case, Plaintiff argued that TrueAccord violated the FDCPA by sending the validation notice in an initial communication by email without the consumer’s consent.  Plaintiff argued that TrueAccord did not follow the E-SIGN Act, which outlines the requirements for obtaining consent to email documents to a consumer that must be provided in writing.  

However, as the Court recognized, the E-Sign Act applies to notices that must be provided in writing.  Under the FDCPA, the validation notice is not required to be provided in writing if it is given in the initial communication.  Since TrueAccord provided the validation notice in the body of the initial communication, E-SIGN does not apply.  The Court ruled TrueAccord properly delivered the validation notice in the body of the initial email.

“The Court also agreed with the CFPB’s proposal on the fact that the subject line should contain the name of the creditor and one additional piece of information about the debt other than the amount.”

The Court, in finding that an initial communication can be made electronically, pointed to the fact that “a communication” is broadly defined and can be sent across any medium. Additionally, the Court pointed out that despite amending the FDCPA in 2006 Congress has not made any effort to amend the statute to account for newer communication technologies that have developed.  The Court also recognized the CFPB’s proposed rulemaking permits a validation notice as part of an initial communication in the body of an email. 

The Court explained that when using email to send the initial communication the notice must be reasonably conveyed to the consumer. This requires the notice to appear in the body of the email—not in an attachment where it could be “hidden from the eyes” of the consumer. 

The Court also agreed with the CFPB’s proposal on the fact that the subject line should contain the name of the creditor and one additional piece of information about the debt other than the amount. This ensures “the consumer’s attention is focused on the email . . . as many . . . make decisions to read, ignore, or delete emails on the basis of the subject line.” 

While TrueAccord’s subject line did not contain this information (it read “This needs your attention”), the Plaintiff received the email and opened it.  While the Court noted that the subject line did not convey that the purpose of the email was to collect a debt, the Plaintiff still opened the email with the validation notice in the body.  Therefore, Plaintiff had no standing to make an argument that the subject misled her from opening and receiving the notice when she actually opened it. 

Use of the term “send” instead of “mailed”

Plaintiff also argued that the validation notice in the body of the email was incorrect and misleading because the statute reads “a copy of such verification . . . will be mailed to the consumer.” Yet, the notice in TrueAccord’s email used the word “send” instead of the word “mailed.” 

When evaluating whether or not a collection communication violates the FDCPA, Courts use the “least sophisticated consumer standard.”  This standard is designed to protect all consumers in the spirit of the FDCPA, not just the consumer who filed a lawsuit.  

In looking at the challenged language under this least sophisticated consumer standard, the Court held that there is no requirement for a validation notice to track the language of the statute verbatim.  The Court stated that: 

“…the fact that TrueAccord’s notice departed from the statutory language could not plausibly have deceived or misled the least sophisticated consumer reading the notice.” 

Instead, the consumer would understand from the use of the word “send” that a copy of the verification could be physically mailed or electronically mailed; as the Court noted, electronic mailing of validation documents is permitted in compliance with the E-SIGN Act.

Subsequent email communications did not overshadow the validation notice

Plaintiff also claimed that multiple demands for payment during the thirty-day validation period violated the FDCPA because these emails overshadowed the initial communication containing the validation notice.  The FDCPA protects consumers from collection efforts and communications sent during the thirty-day validation period that overshadow the consumer’s right to dispute.  Typically, communications that demand immediate payment or offer deadlines prior to the expiration of the thirty days constitute overshadowing.

In dismissing Plaintiff’s theory, the Court found that the FDCPA does not put any limits on the number of times a debt collector can communicate with a consumer during the validation period.  The Court noted that while it is possible that the number and timing of communications sent to a consumer could be relevant in an evaluation of whether the communications overshadow the notice, the number of communications in this case—seven within a 30day period—is not excessive. 

The Court also looked at the content of all these emails.  The emails clearly conveyed that TrueAccord would like a payment. They did not include:

• Language requiring a payment
• Language suggesting that a payment should be made prior to the expiration of the 30-day validation period

The Court noted there was no real expression of urgency and all emails had a prominent out of statute disclosure stating that, because of the age of the debt, the creditor will not sue Plaintiff or report it to a credit reporting agency.  By taking this “non-threatening content” of the communications in consideration with the number of emails sent, the Court did not find it plausible that the least sophisticated consumer could be misled or that the emails overshadowed the validation notice.

What lessons can we learn from this case?

Greene is only the second case ever to evaluate how to properly provide the validation notice by email.  It provides good guidance to follow:

• Placing the notice in the body of the email, not behind a password or through a link with seven steps to download (like in LaVallee) and
• Including the name of the creditor and one additional piece of information in the subject line. This step brings the consumer’s attention to the initial email as relating to the debt (this is also forthcoming in the CFPB rule).

Greene is also the first case ever to evaluate the content of email communications sent during the validation period.  It provides good guidance to follow regarding appropriate tone, frequency, and payment requests.  Of interest, the Court noted that TrueAccord included a “Dispute this Debt” link on all emails.  The Court felt that it’s smaller font size and placement at the footer of the emails “buried” the link; but ultimately that fact:

“…did not mean that the original validation notice ha[d] been overshadowed, particularly given the specific facts before the Court.”  

The text appeared in the footer of all emails, along with our mailing address, phone number, office hours, and Privacy Policy.  

Email is a core part of an omnichannel, digital collection strategy, but it doesn’t evolve overnight. It’s important that you have the experience and infrastructure in place to send and deliver emails on a mass scale so that they’re delivered to the consumer’s inbox. Cases like this are shaping the future of digital debt collection practices and how consumers interact with their debts. 

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Debt collection case law is changing rapidly–want to keep up? The iA Case Law Tracker does that in less time than it takes to pour your morning cup of coffee.